Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
GE Aerospace, liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.09 | 1.18 | 1.16 | 1.28 | 1.58 | |
| Quick ratio | 0.78 | 0.78 | 0.81 | 0.93 | 1.27 | |
| Cash ratio | 0.42 | 0.45 | 0.44 | 0.54 | 0.78 |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Ratio
- The current ratio shows a declining trend over the analyzed period. It decreased from 1.58 at the end of 2020 to 1.09 by the end of 2024. This indicates a steady reduction in the company's short-term liquidity and its capacity to cover current liabilities with current assets. While the ratio remains above 1.0, suggesting that current assets still exceed current liabilities, the downward trend may signal increasing liquidity risk.
- Quick Ratio
- The quick ratio, which excludes inventory from current assets, also demonstrates a consistent decline from 1.27 in 2020 to 0.78 in 2024. This more pronounced decrease highlights a weakening position in immediately liquid assets relative to current liabilities. The ratio falling below 1.0 indicates a potential challenge in covering short-term obligations without relying on inventory sales.
- Cash Ratio
- The cash ratio, reflecting the most conservative measure of liquidity by considering only cash and cash equivalents, experienced a notable decrease from 0.78 in 2020 to 0.42 in 2024. This significant decline suggests a reduction in the company's most liquid resources relative to its current liabilities, implying increased vulnerability to short-term financial demands.
- Overall Analysis
- Across all liquidity metrics, there is a consistent downward trend over the five-year period. This pattern points to a gradual erosion of liquidity strength. The company appears to be becoming less equipped to meet its short-term obligations from its available liquid assets, which could indicate increased financial pressure or a strategic shift in asset management. It would be prudent to monitor these trends closely and assess potential impacts on operational flexibility and solvency risk.
Current Ratio
GE Aerospace, current ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 37,635) | 59,799) | 66,234) | 66,348) | 88,412) | |
| Current liabilities | 34,392) | 50,876) | 56,947) | 51,953) | 56,069) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.09 | 1.18 | 1.16 | 1.28 | 1.58 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Boeing Co. | 1.32 | 1.14 | 1.22 | 1.33 | 1.39 | |
| Caterpillar Inc. | 1.42 | 1.35 | 1.39 | 1.46 | 1.53 | |
| Eaton Corp. plc | 1.50 | 1.51 | 1.38 | 1.04 | 1.56 | |
| Honeywell International Inc. | 1.31 | 1.27 | 1.25 | 1.30 | 1.47 | |
| Lockheed Martin Corp. | 1.13 | 1.21 | 1.32 | 1.42 | 1.39 | |
| RTX Corp. | 0.99 | 1.04 | 1.09 | 1.19 | 1.21 | |
| Current Ratio, Sector | ||||||
| Capital Goods | 1.23 | 1.18 | 1.22 | 1.31 | 1.43 | |
| Current Ratio, Industry | ||||||
| Industrials | 1.19 | 1.16 | 1.20 | 1.29 | 1.41 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 37,635 ÷ 34,392 = 1.09
2 Click competitor name to see calculations.
The financial data presents notable trends in key liquidity metrics over the five-year period under review. A consistent decline in current assets is evident, decreasing from $88,412 million in 2020 to $37,635 million in 2024. This represents a substantial reduction in liquid resources available to the company within the period.
Similarly, current liabilities also show a downward trend, though to a lesser degree relative to current assets. The liabilities decreased from $56,069 million in 2020 to $34,392 million in 2024. This indicates a gradual reduction in the company's short-term financial obligations.
The current ratio, a critical liquidity indicator calculated by dividing current assets by current liabilities, exhibits a steady decline from 1.58 in 2020 to 1.09 in 2024. Despite remaining above the threshold of 1.0, which generally implies the company can meet its short-term obligations, the decreasing ratio points to a weakening liquidity position over the years.
Overall, the trend suggests that although the company continues to maintain a buffer to cover immediate liabilities, the margin has been narrowing. The sharper decrease in current assets in comparison to current liabilities warrants attention, as it may affect the firm's operational flexibility and warrants monitoring of cash flow management and working capital efficiency in the subsequent periods.
Quick Ratio
GE Aerospace, quick ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash, cash equivalents and restricted cash | 13,619) | 16,967) | 17,262) | 15,770) | 36,630) | |
| Investment securities | 982) | 5,706) | 7,609) | 12,297) | 7,319) | |
| Current receivables | 9,327) | 15,466) | 17,976) | 15,620) | 16,691) | |
| Financing receivables, net | —) | —) | —) | —) | 1,265) | |
| Other GE Capital receivables | —) | —) | —) | —) | 3,331) | |
| Current contract assets | 2,982) | 1,500) | 3,088) | 4,881) | 5,764) | |
| Total quick assets | 26,910) | 39,639) | 45,935) | 48,568) | 71,000) | |
| Current liabilities | 34,392) | 50,876) | 56,947) | 51,953) | 56,069) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.78 | 0.78 | 0.81 | 0.93 | 1.27 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Boeing Co. | 0.39 | 0.28 | 0.32 | 0.34 | 0.41 | |
| Caterpillar Inc. | 0.80 | 0.74 | 0.79 | 0.89 | 1.02 | |
| Eaton Corp. plc | 0.85 | 0.91 | 0.73 | 0.54 | 0.68 | |
| Honeywell International Inc. | 0.88 | 0.84 | 0.88 | 0.94 | 1.15 | |
| Lockheed Martin Corp. | 0.92 | 0.99 | 1.09 | 1.15 | 1.05 | |
| RTX Corp. | 0.60 | 0.63 | 0.69 | 0.81 | 0.78 | |
| Quick Ratio, Sector | ||||||
| Capital Goods | 0.62 | 0.60 | 0.64 | 0.71 | 0.83 | |
| Quick Ratio, Industry | ||||||
| Industrials | 0.69 | 0.66 | 0.72 | 0.80 | 0.87 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 26,910 ÷ 34,392 = 0.78
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets demonstrate a consistent downward trend over the five-year period. Starting at $71,000 million at the end of 2020, these assets decreased sharply to $48,568 million in 2021, followed by a smaller decline to $45,935 million in 2022. The decline continued in 2023, reaching $39,639 million, and further reduced substantially to $26,910 million by the end of 2024. This indicates a significant reduction in highly liquid assets available to the company over time.
- Current liabilities
- Current liabilities show a fluctuating pattern but a general decreasing trend towards the end of the period. The liabilities began at $56,069 million in 2020 and slightly decreased to $51,953 million in 2021. In 2022, there was an increase to $56,947 million, followed by a reduction to $50,876 million in 2023. By 2024, current liabilities significantly dropped to $34,392 million. This suggests some volatility in short-term financial obligations with a notable improvement in liability reduction in the last year.
- Quick ratio
- The quick ratio steadily declines from 1.27 in 2020 to 0.78 in 2023, remaining flat at 0.78 in 2024. A quick ratio above 1.0 indicates adequate liquidity to meet short-term liabilities without relying on inventory sales. The decreasing ratio from above 1.0 in 2020 to below 1.0 in subsequent years signals diminished immediate liquidity, suggesting the company increasingly faces tighter short-term financial conditions. The stabilization at 0.78 in the final two years indicates no further deterioration but persistent liquidity constraints relative to earlier periods.
- Overall analysis
- The overall liquidity position shows a weakening trend due to consistent declines in quick assets and deterioration of the quick ratio over the years. Although current liabilities generally decreased toward the end of the period, the decline in liquid assets has outpaced this reduction, resulting in a persistent liquidity constraint. This pattern could signal the need for improved short-term asset management or restructuring of current liabilities to maintain financial flexibility.
Cash Ratio
GE Aerospace, cash ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash, cash equivalents and restricted cash | 13,619) | 16,967) | 17,262) | 15,770) | 36,630) | |
| Investment securities | 982) | 5,706) | 7,609) | 12,297) | 7,319) | |
| Total cash assets | 14,601) | 22,673) | 24,871) | 28,067) | 43,949) | |
| Current liabilities | 34,392) | 50,876) | 56,947) | 51,953) | 56,069) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.42 | 0.45 | 0.44 | 0.54 | 0.78 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Boeing Co. | 0.27 | 0.17 | 0.19 | 0.20 | 0.29 | |
| Caterpillar Inc. | 0.21 | 0.20 | 0.22 | 0.31 | 0.36 | |
| Eaton Corp. plc | 0.26 | 0.34 | 0.09 | 0.08 | 0.19 | |
| Honeywell International Inc. | 0.52 | 0.44 | 0.51 | 0.59 | 0.79 | |
| Lockheed Martin Corp. | 0.13 | 0.09 | 0.16 | 0.26 | 0.23 | |
| RTX Corp. | 0.11 | 0.14 | 0.16 | 0.22 | 0.25 | |
| Cash Ratio, Sector | ||||||
| Capital Goods | 0.26 | 0.24 | 0.26 | 0.32 | 0.44 | |
| Cash Ratio, Industry | ||||||
| Industrials | 0.31 | 0.29 | 0.32 | 0.39 | 0.47 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 14,601 ÷ 34,392 = 0.42
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets have demonstrated a consistent downward trend over the five-year period. Beginning at US$43,949 million at the end of 2020, the cash assets decreased steadily to US$28,067 million in 2021, followed by a further decline to US$24,871 million in 2022. This downward trajectory continued, reaching US$22,673 million in 2023 and ultimately falling to US$14,601 million by the end of 2024. This indicates a significant contraction in cash holdings, with the total cash assets being roughly one-third of their initial level at the end of the period.
- Current liabilities
- Current liabilities displayed a more variable pattern but generally declined over the observed timeframe. Starting at US$56,069 million in 2020, liabilities decreased to US$51,953 million in 2021. However, there was an increase in 2022, with current liabilities rising to US$56,947 million. Subsequently, current liabilities declined again, falling to US$50,876 million in 2023 and then more sharply to US$34,392 million by 2024, indicating a reduction in short-term obligations toward the end of the period. Despite fluctuations, the 2024 value represents a considerable decrease compared to 2020.
- Cash ratio
- The cash ratio, representing the ability to cover current liabilities with cash assets, exhibited a clear and consistent decrease over the five years. Starting at 0.78 in 2020, it dropped to 0.54 in 2021 and further to 0.44 in 2022. The ratio then stabilized somewhat in 2023 at 0.45 but decreased again to 0.42 in 2024. This downward trend indicates a declining liquidity position in terms of immediate cash coverage relative to short-term liabilities, suggesting potential growing pressure on liquid assets to meet short-term obligations.